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Credit Card Debt Relief

Fact: The average American household today has around $16,000 worth of debt solely resulting from overusing credit cards.

Although opening a line of credit could potentially unlock invaluable opportunities for you, it’s just as possible that a new credit card or a new line of credit could cause financial problems that severely limit your future opportunities and financial independence. Applying for a loan or (another) credit card may not seem like a big decision, but it’s important to realize that even the smallest debts can take a long time to pay back. A debt of $16,000, for example, could easily take decades to pay off.

Federal Assistance

After the U.S. experienced a crippling recession in the early 2000s, government officials and financial experts decided that it was time for new laws that aim to protect consumers from aggressive credit card companies, fraudulent debt settlement agencies, and untrustworthy lenders; this is what led to the creation and installment of various federal regulations under the Obama Administration. One of the most significant acts is the Credit Card Debt Settlement Act, which was passed in 2010, and which encourages greater leniency and flexibility during debt settlements. The act encourages credit card companies to accept debt settlements more readily than before; in other words, when a borrower is unable to pay the entire debt owed, the lender can agree to a specific settlement amount to be repaid. The alternative to a debt settlement -- i.e., a common industry practice that exacerbated the 2008 recession -- is when a lender refuses to settle a debt, despite the fact that the borrower will not be able to pay it all back, which forces the borrower to file for bankruptcy in order to wipe out the balance owed. The problem with this practice is that the entire economy is affected when so many debts go completely unpaid. Before the act in 2010, debt settlement was a risky move for both the debtor and the lender. After the act, however, debt settlements became more acceptable and more available. Lenders, individual debtors, and even entire companies struggling with debt have benefited from this federal assistance. So what does all of this mean to you? Well, you certainly aren’t expected to know everything about federal laws, like the Credit Card Debt Settlement Act. But it is important to know that these kinds of regulations are in place, and that you probably have more financial protection than you realize.
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